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Social-Media Frenzy

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The collection of Web capabilities and practices grouped under the rubric of "Social Media" has quickly morphed from a cutting-edge way to foster brand awareness to a mainstream business practice. In fact, given its growing popularity, companies that don't get their arms around social media may risk tumbling into a competitive abyss.

The technology still poses risks; giving consumers a platform from which they can shape a brand's message is a scary proposition, and there have been plenty of stories about employees blogging or tweeting everything from confidential company information to racist rhetoric. But companies are increasingly deciding that the benefits win out.

A 2010 study by communications firm Burson-Marsteller found that 65% of the largest global companies had Twitter accounts, 54% had Facebook fan pages, and 50% had YouTube video channels. And research firm Gartner predicts that by 2014, social media will have surpassed e-mail as the primary communication vehicle for a fifth of business users.

"Unscripted and Unedited"

When Ford Motor was preparing last year's North American launch of the Fiesta, it didn't just make social media part of its strategy: its initial marketing push relied solely on social media. The automaker supplied Fiestas to a mere 100 people to drive for six months. But they were the right 100 people, so-called digital influencers (bloggers, podcasters, YouTube celebrities, and automotive journalists) who cranked out videos, tweets, blog posts, photos, and other media relating to the car. Ford aggregated all this output onto a single Web page where fans could watch this collective test drive unfold in real time. It was all "unscripted, unedited, and undeleted by Ford," says Scott Monty, the company's head of social media.

The results show why companies can't afford to ignore social media. The digital influencers' YouTube videos garnered 7 million views, while 40 million Twitter impressions contained the campaign's name ("Fiesta Movement"). Most tellingly, 130,000 people — 83% of whom had never owned a Ford — registered online to receive more information when the vehicle was shipped to dealers. Surveys showed that U.S. brand awareness of the model shot from near zero to 58%, about equal to some Ford vehicles that have been on the market for years, Monty notes.

All that buzz wasn't mere chatter. For the Fiesta, Ford converted 10 times more prelaunch purchase reservations into actual orders than it did for previous model rollouts. "People trust corporations less than ever," Monty says, "but they trust people like themselves. If they see that people are enthused about what we're doing, that's a more authentic and trustworthy reference."

One of the most successful advertising campaigns of 2010, Old Spice's "Smell Like a Man, Man," became a viral video sensation after being posted on YouTube and Facebook, racking up more than 100 million views in five months. Subsequently, Old Spice invited consumers to submit questions to Isaiah Mustafa, the actor who played the campaign's central character.

Thousands poured in, asking about nearly everything, including "how to save the universe," says Michael Norton, a spokesman for brand owner Procter & Gamble. The company then created video responses to 186 of those questions, which generated an additional 46 million media views for Old Spice.

More-modest efforts can still deliver value, sometimes at a startlingly low cost. Nissan North America took an exceptionally grassroots tack last fall when it hired iwearyourshirt.com for a day. Every day, the site's founder, Jason Sadler, wears the shirt of a different company that he promotes all day through social media, including videos on YouTube and a one-hour live video stream on ustream.tv. The service, which generated about 100,000 impressions for Nissan across various social-media channels, cost the company only $800.

We Hear You

Just as important as attracting followers to a brand is listening to what they say. Kodak, which recently created a "chief listener" position, regularly incorporates ideas from its social-media community into new products. For example, after noticing critical comments about the inscrutable names of its pocket video cameras, like Zi8 and Zx1, the company threw the matter back to its fans, soliciting submissions for the name of the next product. The winners — there were two, who separately proposed Play and Sport, which Kodak combined into PlaySport — got a trip to Las Vegas for the product's launch at the Consumer Electronics Show.

Keeping conversations going with personal outreach helps melt impressions of companies as cold and impersonal. Jennifer Cisney, Kodak's chief blogger and social-media manager, says that her daily activity consists mostly of listening to what people are saying about the company and then talking with them. "Before, if someone wanted to talk to the company, they could write a letter or try to call, but now people feel they know me," she says.

Finding new ways to listen to people can be something of a sport. During Dell's November earnings call, the computer giant tweeted what the presenting executives were saying through its @dellshares investor-relations channel. Manish Mehta, Dell's vice president of social media and community, says the tactic exponentially expanded the call's reach to several million people, whose own tweets were displayed on a big screen in the room where the presentation was taking place. IR personnel responded to questions and comments as they came in, providing a richer audience experience.

Small companies are also jumping on the bandwagon. Used-car company Auction Direct created a minicampaign based on a viral Facebook posting in which a woman purportedly quit her job by writing notes on a whiteboard. Eric Miltsch, the company's IT and Internet director, used Photoshop to strip out the original words and insert his own, making the woman appear to be talking about her recent car-buying experience. After he posted the doctored slide show, traffic poured in. That spurred sales, but the real goal, Miltsch says, was to offer something auto-related that is entertaining or informative so that "people remember that it came from us."

Bang vs. Bucks

When it comes to assessing the ROI of social media, companies generally have to be content with identifying a positive impact on customer engagement. It's difficult to correlate engagement to the bottom line, which is why some senior executives still aren't sure whether they want to make the investment, says Jeremiah Owyang, a social-business analyst with Altimeter Group.

But investments don't break the bank. In an October 2010 Altimeter survey of 140 firms with more than 1,000 employees, those that identified themselves as beginner or experimental users of social media spent an average of $66,000 a year. Those that made the transition to a formal program with dedicated head count spent $1 million — still typically less than 1% of their overall marketing spend, says Owyang.

"The promise of social media is that if you do it well, your customers do the work of spreading the word for you, so we should always expect these dollar amounts to be small," Owyang says. "And if you do it well, you'll get more return than from traditional media."

David McCann is senior editor for human capital and careers at CFO.

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